Yes, dividends. Almost always.
No one is saying dividends always work, but in a period like this why wouldn't you want to select for them in a passive portfolio? A good broker never forgets how powerful high dividend payers can be versus the rest of the market.
Why dividends? Jeremy Schwartz has done a lot of great work on the topic building on the groundbreaking research from his colleague at WisdomTree, Prof Jeremy Siegel (yes, your name has to be Jeremy to get a job at WisdomTree, I checked).
Anyway, Ritholtz and I have been constructing our secular bear market core portfolios almost exclusively with dividend-weighted ETFs since January 2011 (before everyone else went nuts for dividends) whenever we do indexes. In a secular bear, you don't want cap-weighted or price-weighted indexes, you want yield and relative value more than you want price momentum. This changes a bit in a lasting bull market, but we ain't there yet.
No one is saying dividends always work, but in a period like this why wouldn't you want to select for them in a passive portfolio? This is the kind of thing that separates good asset management from scattershot portfolios with no clear objective.
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